Zurich sees limited rises

Commercial insurance premiums will rise in the Asia-Pacific regions affected by natural catastrophes but the impact may not be sufficient to lift global pricing, Zurich’s global chief underwriting officer says.

“If you were [an insurer] in the affected regions prices would harden for sure, but we don’t know the impact for the rest of the world yet," Zurich’s Inga Beale said.

“If there is capital erosion in the whole industry because these events are so costly then it starts to impact pricing, regardless of whether insurers have been impacted by claims activity."

Fund managers and analysts suggest that the impact of the Australian, New Zealand and Japanese floods, earthquakes and tsunami are likely to be geographically contained, due to the concentration of insurance held with local companies or paid for by government (as with Japan).

QBE chief executive
Frank O’Halloran
has pointed to a bad US hurricane season as the trigger for commercial insurance prices to lift globally.

Separately, the Zurich-based Ms Beale said Australia’s move to a ­single definition for flood might lead to people taking less cover if ­customers limited the amount they were prepared to pay for insurance.

“It could lead to less insurance [cover] if people are not prepared to pay the extra premium," she said.

Commonwealth Bank insurance analyst Ross Curran recently noted that underinsurance was likely to increase after the move to a single definition for flood, as higher premiums discouraged consumers from any form of flood insurance.